There is a great scene in Monty Python’s The Life of Brian when Reg, the leader of ‘resistance’ movement, the People’s Front of Judea, demands of his fellow freedom fighters: ‘what have the Romans ever done for us?’ This was meant to be a rhetorical flourish but Reg’s comrades are not with the script and list the benefits the Romans brought including: aqueducts, sanitation, roads, irrigation, wine, law and order, and peace.
Now, the UK doesn’t have the same relationship with the EU as the Judeans had with Imperial Rome. Nor has membership of the EU produced the same level of progress in the UK. But, there is actually a serious point here.
UK citizens have gained much from a huge range of consumer and social protection measures introduced through, or influenced by, EU legislation and regulations. Consumer protection measures can be found across a wide range of markets including financial services, food, health and medicines, utilities, electronic goods, transport and tourism, and so on (for illustration, we have included a number of examples from range of markets with a focus on financial services in the Annex, below).
The measures were introduced to make products and markets safer, give us access to a wider choice of better value products and services, and enforceable rights and redress if things go wrong. But, it’s more than that. These measures have given us a better quality of life. However, UK citizens could lose valuable protection as a result of the EU referendum – regardless of whether the UK votes to remain or leave.
It is only fair to point out that the UK may well have introduced consumer protection measures in these markets even if the UK wasn’t a member of the EU. But, experience tells us that the degree of protection available to UK consumers is higher in key areas because of UK membership. Put bluntly, the EU has had a ‘civilizing’ effect on the UK. Other major EU member states seem to attach more importance to the principles of social justice, the rights of citizens and the belief that markets should serve society – in contrast to the dominant ideology in the UK which puts the market first. Therefore, if the UK votes to leave, we think there is a very high risk that consumer rights and power would be weakened.
But, why might consumers lose regardless of which way the vote goes? One of the key planks of the UK Government’s negotiations relates to ‘competitiveness’. That is, the UK Government says it is trying to get the other EU governments and EU institutions to agree to a programme of deregulation to aid ‘competitiveness’ and the development of the single market.
We note with growing concern the regular scaremongering about regulatory ‘burdens’ and ‘red tape’ stifling innovation and competitiveness. In our experience, this is code for attempts to deregulate and reduce important consumer protection and other social protection measures.
This, of course, would suit big business and the UK financial sector in the short term. But, it is a misguided approach and could increase the risk of consumers being ripped off and being exposed to risky products and services. Ultimately, this would harm consumer confidence and trust in the single market and actually hurt industry in the long term.
No one wants superfluous regulations that benefit neither consumers nor industry. There are examples of duplication and inconsistency in EU legislation and regulation which could be streamlined. But, claims that regulation stifles innovation and competition is scaremongering and usually just plain wrong. This is all part of a campaign by industry lobbies to reduce corporate costs and liability and transfer risk and responsibility to consumers and wider society. Regulation levels the playing field for consumers, promotes consumer confidence and creates the conditions for true innovation and effective competition.
The media has been distracted by the sensitive issue of welfare benefits (which in all likelihood will have very small monetary impact on UK public finances) and the political drama of the referendum itself. But the issue that could have a very real effect on our citizens rights and quality of lives has not been subject to any meaningful scrutiny. Real progress has been made in many of the major consumer markets as a result of EU legislation and regulation. But there is still much to be done particularly in areas such as financial services. Now is not the time to reverse the progress made. We need to have a proper, transparent debate about this rather than sleepwalking into losing valuable consumer protection and rights.
ANNEX I: SELECTION OF AREAS IN WHICH EU LEGISLATION AND REGULATION APPLIES
The Financial Inclusion Centre obviously focuses on financial services legislation. But, we have included some examples relating to other consumer markets to illustrate the extent to which UK consumers have benefited from EU legislation and regulation.
FINANCIAL SERVICES AND FREE MOVEMENT OF CAPITAL
There is a huge body of EU legislation and regulation relating to financial services and movement of capital within the EU. The legislation covers: financial stability; prudential regulation; conduct of business regulations; and creating the single market and competition. This is by no means an exhaustive list:
- Capital Requirements Directive (CRD) IV covering prudential regulation of banks
- Harmonised Deposit Guarantee Schemes
- Mortgage Credit Directive (MCD) aims to create an EU-wide mortgage credit market with a high level of consumer protection
- Consumer Credit Directive (CCD) designed to establish the conditions for a genuine single market in consumer credit, ensure a high level of consumer protection and improve clarity by recasting existing Directives. The CCD applies to all providers of credit to consumers, such as banks and building societies and all credit intermediaries
- Directive on Payment Services (PSD) provides the legal foundation for the creation of an EU-wide single market for payments – it also provides the necessary legal platform for the Single Euro Payments Area (SEPA)
- Payment Accounts Directive – among other things provides all EU citizens with a legal right of access to a basic bank account (first time this is a legal right in the UK)
- Solvency II Directive: the EU’s prudential regime for insurers
- Insurance Mediation Directive (IMD) establishes common standards and an authorisation regime for the sale of insurance and reinsurance across the EU by intermediaries and brokers – IMD II extends the scope of the regime to include the direct sales forces of insurers and imposes new requirements intended to increase consumer protection, particularly for insurance investment products
- UCITS Directive (now on its fifth update) provides a harmonised framework of investor protection and product regulation for UCITS funds and UCITS fund managers. Funds complying with the Directive’s requirements can market their units freely across the European Economic Area (EEA) on the basis of a single authorisation in their home Member State, subject to complying with the UCITS regime
- AIFMD establishes a new harmonised regulatory framework for managers of investment funds not already authorised under the UCITS Directive. AIFMD was primarily targeted at the hedge fund and private equity sectors, but covers many other categories of fund, including real estate and several types of retail schemes
- Prospectus Directive covers information which companies seeking to raise money (whether as equity or debt) need to provide to potential investors and the way in which it is to be provided
- Transparency Directive sets out detailed rules as to how companies that have issued securities must report to the markets in a timely way about their performance, in particular if an event arises that is likely to affect the value of their securities
- Markets in Financial Instruments Directive (MiFID) covers: the platforms for the trading of financial instruments, both exchanges and alternative venues; the trading of these financial instruments, in particular rules covering pre- and post-trade transparency; and the authorisation and conduct of intermediaries in financial markets
- European Market Infrastructure Regulation (EMIR) covers: the clearing of over-the counter (OTC) derivative trades, the authorisation and prudential and conduct oversight of clearing houses and trade repositories
- Central Securities Depositories Regulation (CSDR) covers the settlement of trades and the authorisation and supervision of central securities depositories (the infrastructures on which trades are settled)
- Market Abuse Regulation (MAR) covers the deterrence and punishment of market abuse, including insider dealing, market manipulation and unlawful disclosure of information
- Benchmarks Regulation relates to all benchmarks, including key ones such as LIBOR and EURIBOR.
FREE MOVEMENT OF GOODS/ SERVICES/ SINGLE MARKET/ CONSUMER PROTECTION PROVISIONS
There is a raft of measures aimed at promoting a more efficient single market in goods and services – in theory improving choice of and access to better value products and services. The measures deal with:
- Import/ export restrictions
- Access to EU markets/ Free Movement of Services and Goods
- Freedom of establishment for firms and individuals (self-employed)
- E-Commerce/ Digital Single Market
- Consumer protection (inc cross border rights to redress) when buying and selling goods and services
- Product safety standards
- Unfair contracts regulations
- Unfair commercial practices
FOOD SAFETY/ HYGIENE
The key areas in which EU legislation, regulations and directives operate in food safety and hygiene include:
- Import of animals and animal products
- Animal disease notification
- Food quality and safety – from ‘farm to fork’
- Food labelling
- Food additives
- Marketing claims
- GM foods
- Water quality
HEALTH AND MEDICINES
In the health and medicines sector, EU legislation and regulation covers:
- Medicine safety and clinical trials
- Health equipment/ medical devices safety and quality
- European Health Insurance Card (EHIC)
- Working time directive for health professionals
- Health security, communicable and rare diseases
- Medical research funding
- Public health and nutrition
- Tobacco products
ENVIRONMENT/ CLIMATE CHANGE
EU regulation covers:
- Industrial pollution, clean air and water
- Packaging and waste handling
- Greenhouse gas emissions
EU regulation covers:
- Promoting competition in airline through open access provisions, freeing up airport slots and ‘fair fares’
- Compensation for overbooked flights/ delays
- Noise pollution
- Passenger rights for rail and road (coaches)
CULTURE, TOURISM AND SPORT
EU regulation has even had an impact on culture, holidays and football:
- EU copyright laws
- Free Movement
- The Bosman Case
 Python fans are sticklers for accuracy. So, just to clarify, this paraphrases Reg. He says this after his comrades listed the benefits. He first asks ‘what have they given us in return?’ or words to this effect.
 There is also a huge body of employment rights at jeopardy. These are not within our remit but it should be pointed out that if these are weakened, financial and social exclusion could be exacerbated.
 For details see: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/332668/bis-14-987-free-movement-of-services-balance-of-competencies-report.pdf
 For details see: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/227367/DEF-PB13979-BalOfComp-HMG-WEB.PDF
 For details see: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/224715/2901083_EU-Health_acc.pdf
 For details see: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/284500/environment-climate-change-documents-final-report.pdf
 For details see: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/278966/boc-transport.pdf
 For details see: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/279456/2901485_BoC_CultureTourismSport_acc.pdf